§ 27-3-38. Surplus line brokers — License — Affidavit of inability to obtain insurance — Reports
and records — Premium tax — Notice to purchasers.
(a) The insurance commissioner may issue a surplus line broker's license to any person
authorizing the licensee to procure, subject to the restrictions provided in this
section, policies of insurance, except life and health and accident, except as allowed
under § 27-3-38.3, from eligible surplus lines insurers. Residents of this state must hold an insurance
producer license to qualify for a surplus lines broker license. This license may be
denied, suspended, or revoked by the insurance commissioner whenever, in the commissioner's
judgment, any of the bases under § 27-2.4-14 exist. Before any license is issued by the insurance commissioner and before each
renewal of a license, there shall be filed in the commissioner's office a written
application by the person desiring the license in the form, and containing any information,
that the insurance commissioner may prescribe. For the purposes of carrying out the
provisions of the Nonadmitted and Reinsurance Reform Act of 2010, the commissioner
is authorized to utilize the national insurance producer database of the National
Association of Insurance Commissioners (NAIC), or any other equivalent uniform national
database, for the licensure of a person as a surplus lines producer and for renewal
of such license. For insureds whose home state is this state, a person shall not procure
a contract of surplus lines insurance with a nonadmitted insurer unless the person
possesses a current surplus lines insurance license issued by the commissioner.
(b) A Rhode Island resident business entity acting as a surplus line broker may elect
to obtain a surplus line broker license. Application shall be made using the uniform
business entity application. Prior to approving the application, the commissioner
shall find both of the following:
(1) The business entity has paid the appropriate fees.
(2) The business entity has designated a licensed surplus line broker responsible for
the business entity's compliance with the insurance laws and rules of this state.
(c) When any policy of insurance is procured under the authority of that license, there
shall be executed, both by the licensee and by the insured, affidavits setting forth
facts showing that the insured, or a licensed Rhode Island producer, were unable,
after diligent effort, to procure from no less than three (3) admitted insurers the
full amount of insurance required to protect the property owned or controlled by the
insured or the risks insured. Provided, however, the aforementioned affidavit shall
not be required when insuring the following interest: amusement parks and devices,
environmental improvement and/or remediation sites, vacant property or property under
renovation, demolition operations, event cancellation due to weather, railroad liability,
discontinued products, fireworks and pyrotechnics, warehouseman's legal liability,
excess property coverage, private flood, and contingent liability. In addition, no
such affidavit is required for exempt commercial purchasers as defined by the Nonadmitted
and Reinsurance Reform Act of 2010. For purposes of this section, residual market
mechanisms shall not be considered authorized insurers. Prior to renewing, continuing,
or extending any policy, the licensed surplus line broker must confirm that the insurer
is on the insurance commissioner's list of approval surplus line insurers in this
state.
(d) The licensee shall keep a complete and separate record of all policies procured from
approved surplus lines insurers under the license and these records shall be open
to the examination of both the insurance commissioner and tax administrator at all
reasonable times and shall show the exact amount of each kind of insurance permitted
under this section that has been procured for each insured; the gross premiums charged
by the insurers for each kind of insurance permitted under this section that were
returned to each insured; the name of the insurer or insurers that issued each of
these policies; the effective dates of these policies; and the terms for which these
policies were issued. The licensee shall file a yearly report with the insurance commissioner
on a form prescribed by the insurance commissioner showing the business procured under
the surplus line license for the preceding calendar year, and the report shall be
due annually on or before April 1.
(e) Every person, firm, or corporation licensed pursuant to the provisions of this section
shall file with the insurance commissioner, at the time of the insurance producer
license renewal, sufficient information, as determined by the insurance commissioner,
whether a licensee or a person acting on the licensee's behalf, has paid to the tax
administrator, for all policies procured by the licensee pursuant to the license during
the next preceding calendar year, a tax, computed at the rate of four percent (4%)
on the gross premiums charged the insured by the insurers, less the amount of premiums
returned to the insured. The tax administrator shall provide to the insurance commissioner,
upon request, information needed to determine compliance with this subsection. The
content and nature of the information to be disclosed shall be determined and approved
by the tax administrator, shall be the minimum necessary to determine compliance,
and shall be kept confidential by the insurance commissioner.
(f) Every application form for insurance from a surplus lines insurer, every affidavit
form executed by the insured, and every policy (on its front and declaration pages)
issued by the surplus lines insurer, shall contain in ten-point (10) type the following
notice:
NOTICE
THIS INSURANCE CONTRACT HAS BEEN PLACED WITH AN INSURER NOT LICENSED TO DO BUSINESS
IN THE STATE OF RHODE ISLAND BUT APPROVED AS A SURPLUS LINES INSURER. THE INSURER
IS NOT A MEMBER OF THE RHODE ISLAND INSURERS INSOLVENCY FUND. SHOULD THE INSURER BECOME
INSOLVENT, THE PROTECTION AND BENEFITS OF THE RHODE ISLAND INSURERS INSOLVENCY FUND
ARE NOT AVAILABLE.